IF ONLY the French would drink more beer — then Scottish & Newcastle, the British market leader, could really square up to the big boys of brewing. At the moment, however, S&N looks distinctly second-tier compared with the Anheuser Busches and SAB Millers of this world.

Thirsty British football fans sent sales soaring during the World Cup, even though the England team gave them little to celebrate. In contrast, sales of branded beer in France actually fell. French consumers would have to drink almost three times as much beer as they do now before they matched the 100 litres per head annual consumption of the UK.

Tony Froggatt, the Australian chief executive who arrived two years ago, has tried to tackle this problem by turning his cost-cutting eye on the French business. He and an army of external recruits from the consumer goods world have broken down the fiefdoms that used to run the business and introduced discipline and cuts to costs, procurement, advertising and promotional spending.

Yesterday’s interim results revealed the brewer’s determination to carry on with cost-cutting, with a new restructuring plan that is expected to affect UK operations due to be announced in February. Analysts suggested that the next round of savings could be worth £30 million, on top of that which has already been achieved.

Emerging markets in the Baltics, Ukraine and Kazakh-stan are performing well, as are other territories, including Portugal, the United States and Greece. The brewer is benefiting from the hot summer and new products. One unknown, though, is the impact next year of a UK smoking ban in pubs.

The shares slipped 2.6 per cent yesterday on concern over S&N’s margins. Speculation that the brewer, currently the world’s seventh-largest, may one day be snapped up by one of the top three continues to underpin the share price. Yet there is no obvious predator, as Anheuser Busch seems to be absorbed in pushing its two massive Bud brands and SABMiller has had its own issues integrating Miller. Carlsberg would trigger monopoly issues in the British market.

The best reason for continuing to hold the shares is the emerging markets businesses, which include toeholds in China and India. The reasonable 4.3 per cent yield is also worth having. Hold.

Friends Provident

FRIENDS PROVIDENT was regarded as a takeover target when it floated five years ago, but Keith Satchell, the out- going chief executive, has proved his doubters wrong.

He has grown the business cleverly through a combin-ation of organic growth and acquisitions, such as Royal & SunAlliance’s operations on the Isle of Man and Lombard, the Luxembourg-based wealth manager, which have given the group access to the richest citizens in Europe.

Although Friends is in Asia — a marketplace likely to be key to the future of British insurers — it has not sought mass appeal in overseas markets, as its rivals have. Instead, it has opted to cater to the wealthy classes that can afford financial advice. Although Mr Satchell will retire in the first half of next year, he has been grooming his replacement, Philip Moore, the finance director, so there is unlikely to be much change to Friends’ relatively steady growth.

Meanwhile, strong sales — up 51 per cent in the UK — are helping to improve margins, even on a traditionally low- margin business such as group pensions. New business profits pleased the City at £89 million, up 53 per cent on £58 million in the first half of last year.

The market took offence yesterday at a 9 per cent fall in the group’s half-year underlying pre-tax profit, which dropped from £272 million in 2005 to £247 million, but it is worth noting that the interim profits last year were flattered by the release of £30 million after it overestimated the amount of funds that it needed in reserve to support its with-profits fund. Better than expected claims experience on protection products added a further £16 million.

The insurer trades at more than 11 times prospective earnings — slightly more expensive than rivals, but it is trading at only about 1.3 times embedded value, at the lower end of the sector. With a solid dividend yield of 4.4 per cent, Friends is ahead of the sector average of 3.89 per cent.

The business looks well placed to grow market share. Hold the shares.

Moss Bros

ANYONE who has rented a dinner jacket is familiar with the journey to a Moss Bros store. The menswear retailer, which also trades under brands such as Cecil Gee and Savoy Taylors Guild, claims to be the leader in the UK hire market, with a 25 per cent share.

Royal Ascot and an increase in the number of people wearing morning suits provide Moss Bros with a solid customer base. However, figures out yesterday showed that sales had turned negative. The company blamed the hot weather and the impact of the football World Cup, which it said had cost it £1.1 million in lost sales. Utility and rent costs were up 6.6 per cent on a like-for-like basis, double its usual increase.

Philip Mountford, the chief executive, said that the poor trading was only a blip. The company trades at 12 times prospective earnings, a slight discount to the sector. The shares have halved since February and may fall farther in the short term, but this is a well-run company that is 28 per cent owned by an investment vehicle partly owned by Baugur, the Icelandic group. Hold.

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive